Alcoa to Save Energy – Analyst Blog

Aluminum giant Alcoa Inc. (AA) has signed an agreement with the US Department of Energy to become a member of “Save Energy Now Leader” program. The company intends to reduce energy intensity (consumption per unit of output) by 25% through 2020.

 

Save Energy Now is a new program aimed at improving energy consumption at the US industrial facilities. The Department of Energy would provide all technical support and expertise to the members of the program.

 

Alcoa has harnessed all its US based smelters engaged in the manufacturing of downstream aluminum products in the energy-conserving program. The company’s US facilities manufacture a wide range of downstream products including turbine fan blades for jet engines, aluminum can sheet, and an aluminum composite used on the exteriors of commercial buildings.

 

Till date, apart from Alcoa, 60 other companies have already joined the program. These include biggies such as chemical maker Eastman Chemical Company (EMN), aerospace and defense equipment manufacturer Raytheon Corporation (RTN) and oil and gas equipment maker Lufkin Industries (LUFK).

 

Pennsylvania-based Alcoa Inc. is among the world’s leading producers of primary and fabricated aluminum and alumina. It involves the technology of mining, refining, smelting, fabricating and recycling of aluminum. The company runs about 350 facilities in approximately 41 countries.

 

Higher energy costs have been eroding margins for Alcoa. We expect rising energy and raw material costs to continue constraining margin expansion, despite these cost saving initiatives. The company will pay more to purchase its essential supplies of oil, natural gas, caustic soda, carbon and resin. Higher-than-expected input costs or unplanned outages could negatively impact the company.

 

 Alcoa is expected to report second quarter 2010 results on July 12, 2010.